Foreign Portfolio Investment Surges 88.5% in May, Driven by Market Optimism
Foreign investors are making a strong comeback to the Nigerian capital market, as foreign portfolio investment (FPI) in May 2025 jumped by a staggering 88.5% to ₦118.91 billion, up from ₦63.07 billion in April. This marks the sharpest month-on-month rise so far this year and reflects growing confidence in Nigeria’s equities market.
The spike in foreign inflows is largely attributed to moderating fixed income yields and improved investor sentiment, which have made Nigerian equities more attractive on a risk-adjusted basis. This resurgence of foreign interest has helped to significantly lift total market activity.
According to the latest Domestic and Foreign Portfolio Investment Report from the Nigerian Exchange (NGX), total market transactions climbed by 45.3% month-on-month to ₦700.50 billion in May, from ₦482.04 billion in April. This surge was fueled by higher participation from both local and foreign investors.
Domestic Investors Still Dominate
Despite the renewed foreign interest, domestic investors maintained dominance, accounting for 83% of total market transactions, while foreign investors contributed 17%. Specifically, domestic transactions rose by 38.8% month-on-month to ₦581.59 billion, up from ₦418.97 billion in April.
Interestingly, retail investors led the charge, with an 86.1% increase in activity, while institutional domestic investors saw a modest 2.7% uptick. This suggests growing retail confidence in local stocks, possibly driven by interim dividend expectations and value opportunities.
Foreign Inflows vs Domestic Outflows
Net flows into the market declined by 54% to ₦2.64 billion in May (from ₦5.74 billion in April), mainly due to contrasting flows:
• Net foreign inflows stood at ₦13.31 billion, indicating strong offshore demand for Nigerian assets.
• Net domestic outflows totaled ₦10.67 billion, hinting at mild local profit-taking or repositioning.
Analysts’ Outlook
Analysts at Cordros Capital believe the outlook remains favorable for sustained domestic activity, stating:
“We expect domestic investors to remain the primary drivers of transaction value, supported by an anticipated decline in fixed income yields. Furthermore, the relative stability of the naira is likely to encourage increased participation from foreign investors. However, global uncertainties still pose downside risks to sustained inflows.”
What This Means for the Market:
• Short-Term: Continued buying interest, especially from domestic retail players, could support market stability and selective price appreciation.
• Medium-Term: If naira stability holds and fixed income yields remain low, FPI momentum may continue, benefiting blue-chip and high-liquidity stocks.
• Risks: Geopolitical uncertainties and global monetary policy decisions could temper further foreign interest.
In all, May 2025 has emerged as a turning point for foreign capital flow, offering renewed optimism for Nigeria’s capital market participants.
Foreign investors are making a strong comeback to the Nigerian capital market, as foreign portfolio investment (FPI) in May 2025 jumped by a staggering 88.5% to ₦118.91 billion, up from ₦63.07 billion in April. This marks the sharpest month-on-month rise so far this year and reflects growing confidence in Nigeria’s equities market.
The spike in foreign inflows is largely attributed to moderating fixed income yields and improved investor sentiment, which have made Nigerian equities more attractive on a risk-adjusted basis. This resurgence of foreign interest has helped to significantly lift total market activity.
According to the latest Domestic and Foreign Portfolio Investment Report from the Nigerian Exchange (NGX), total market transactions climbed by 45.3% month-on-month to ₦700.50 billion in May, from ₦482.04 billion in April. This surge was fueled by higher participation from both local and foreign investors.
Domestic Investors Still Dominate
Despite the renewed foreign interest, domestic investors maintained dominance, accounting for 83% of total market transactions, while foreign investors contributed 17%. Specifically, domestic transactions rose by 38.8% month-on-month to ₦581.59 billion, up from ₦418.97 billion in April.
Interestingly, retail investors led the charge, with an 86.1% increase in activity, while institutional domestic investors saw a modest 2.7% uptick. This suggests growing retail confidence in local stocks, possibly driven by interim dividend expectations and value opportunities.
Foreign Inflows vs Domestic Outflows
Net flows into the market declined by 54% to ₦2.64 billion in May (from ₦5.74 billion in April), mainly due to contrasting flows:
• Net foreign inflows stood at ₦13.31 billion, indicating strong offshore demand for Nigerian assets.
• Net domestic outflows totaled ₦10.67 billion, hinting at mild local profit-taking or repositioning.
Analysts’ Outlook
Analysts at Cordros Capital believe the outlook remains favorable for sustained domestic activity, stating:
“We expect domestic investors to remain the primary drivers of transaction value, supported by an anticipated decline in fixed income yields. Furthermore, the relative stability of the naira is likely to encourage increased participation from foreign investors. However, global uncertainties still pose downside risks to sustained inflows.”
What This Means for the Market:
• Short-Term: Continued buying interest, especially from domestic retail players, could support market stability and selective price appreciation.
• Medium-Term: If naira stability holds and fixed income yields remain low, FPI momentum may continue, benefiting blue-chip and high-liquidity stocks.
• Risks: Geopolitical uncertainties and global monetary policy decisions could temper further foreign interest.
In all, May 2025 has emerged as a turning point for foreign capital flow, offering renewed optimism for Nigeria’s capital market participants.